Google Expects Solid Q2 Amid China, Europe Concerns

Analysts polled by Thomson Reuters expect Google to report earnings of $6.54 per share on sales of $5 billion July 15. Google's conflicts in China and Europe and competition with Apple, Facebook and Bing could weigh on the search engine.

Google is sure to face questions about its business abroad and snafus in the
United States,
such as the failure of its Nexus One smartphone to catch on in the market, when
it announces second-quarter earnings July 15.
The company will hold a call to discuss Q2 earnings July 15 after the market
close. Analysts polled by Thomson Reuters expect Google to report earnings of
$6.54 per share on sales of $5 billion.

That's significantly higher than the $4.66 per share on revenue of $5.52
billion the company baked in the second quarter of 2009, with the online
advertising sector recovering from the recession.

Some analysts will argue the market is still recovering, but most agree
Google's core business remains strong.
This appears true even in the face of competitive threats such as Apple,
Microsoft's Bing and Facebook, as well as troubles in China,
antitrust concerns in Europe and hiccups on the home
front.
The European Commission antitrust authority is currently looking into allegations of anti-competitive conduct in search
versus Google from search startups such as Foundem and Microsoft's Ciao from
Bing.

Google has been at odds with China
since a cyber-attack originating from that country induced Google to stop censoring search and port users to
Google.hk.
China did
not like Google's bid to obviate its laws, and there were thoughts the country
would not renew the search engine's license to conduct business there. China
renewed the license, but tensions between Google and the
country remain high.
FBR Capital Markets expects Google to
report $5 billion in revenues and an earnings per share of $6.55. The research
firm said July 13 Google's stock has been pressured by the China
rift and a "seemingly endless wave of less tangible big picture
concerns."
This includes Google's worsening relationship with Apple, privacy issues and
regulatory concerns. However, the license renewal in China
and a victory over Viacom regarding its YouTube property may
shift sentiment.
Jefferies and Co. analyst Youssef Squali expects net revenues and net
earnings per share of $4.86 billion and $6.41, respectively. Squali said his
channel checks suggest that marketers' appetite for search advertising,
Google's bread and butter, remains strong.
Citing comScore's latest search metrics, which put Google at 66 percent market share in the United
States, he said Google's U.S.
search volume grew by 9.2 percent year-over-year in the second quarter.
Of course, there could be some fluctuations in the numbers. Squali said he
anticipates some top-line risk in consensus numbers as the Street has yet to
fully gauge FX headwinds and revenue loss from the Nexus One.
Google launched its Nexus One smartphone in January, selling it
exclusively from its Webstore for $179 with a T-Mobile contract or unlocked for
$529. Consumers shied away from buying a handset without playing with it, and
Google shuttered the store May 14.
The failure proved a blow to the company's plans to bring the phone retail
sector into the land of e-commerce. Analysts on the earnings call Thursday may
hammer Google on how much it made and lost from the Nexus One.